Are you wondering how to value your surgery center and what’s your surgery center worth? Then, this blog post is for you! Ideally, knowing how to value your surgery center requires defining a surgery center in the first place. So, read on to get all the answers to your questions.
Namely, surgery centers are in demand! We can also call it a “seller’s market”. We previously taught you how to market your surgery center, right?
Now, your center is probably worth more than you think it is, however, in order to realize the maximum value, the center must be properly prepared so that it represents exceptional value to the buyers.
What is a surgery center?
Before we start tackling how to value your surgery center? Let’s start with defining the surgery center and its benefits! Surgery centers, also known as ambulatory surgery centers (ASCs), are licensed freestanding outpatient facilities. These centers are often physician-owned, may specialize in certain procedures, and are typically smaller than hospitals.
Ideally, Ambulatory surgery centers give surgical care in one day on a diagnostic level and preventive procedures level. Hence, surgery centers have many benefits, let’s check them out hereunder.
- Time-saving: normally, hospitals make patients wait from a day to a week before performing surgery. This causes anxiety and stress. The ASC system allows the patient to leave the same day. It offers higher equipment for appointments scheduling. Asc also prevents the patient from dealing with critical emergencies that delay a scheduled operation.
- More cost-effective: you might want to know what is an ambulatory surgical center. If you care about cutting your costs. Insurance deductibles and hospitals visits keep rising. This is leading the patients to seek alternative facilities including ascs. This is due to the ASC lacking the overheard of staff and emergency surgery equipment.
- An adequate number of nurses: acs have a higher nurse-to-patient ratio. The narrowly focused system helps the staff to schedule in a more efficient manner. This helps with avoiding overbooking and overworking. These factors contribute to assigning the right number of nurses to take care of each patient.
- Case-by-case treatment: if you have a choice between a hospital and a surgical center, it is better to choose ASC. Consult with your doctor to see if this is safe for you. to benefit from low-cost and more accessible case-by-case treatment.
Higher demand for surgery centers
Now how to value your surgery center? The first thing you need to know is that ASC values are based on profitability, so anything you can do to increase profits will increase the value of your center.
Luckily, the demand for surgery centers is expected to rise over the next decade fueled by cost containment, convenience, and clinical advancements. Having said that, this is expected to result in the exponential growth of case volumes.
If you’re a surgery center owner, you can prepare for this growth by aligning with strategic partners that bring resources to capture this growth and profit from it. So, your goals now are to prepare your surgery center to represent maximum value and to partner with an entity that will ensure that your center will benefit from future growth.
How to value your surgery center?
Whether you’re asking how to value your surgery center because you’re willing to buy or to sell an ASC or you’re just working for one. It’s very important to know that many factors affect the value of an ASC.
For instance, earnings are critical, but growth potential, assets, location, and reputation can also influence the worth of an ASC. Here’s what you need to consider when valuing a surgery center!
Earnings are the most important contributor to a facility’s value. The healthier the financial results, the higher the value. Experts say that the fair market value of an ASC will range from three to six times the projected earnings before interest, depreciation, taxes, and amortization (EBITDA) depending on the number of specialties.
The potential for growth
The second most important contributor to an ASC’s value is its potential for growth. Having said that, multi-specialty centers bring in higher EBITDA multiples for this very reason.
Assets, location, reputation
Assets, location, reputation are also key contributors to increasing the value of the ASC. Ideally, when choosing the right assets and location and having a good reputation, the value of your center will increase.
How to increase the value of your surgery center?
The fastest way to increase the value of a surgery center is by:
- Identifying and recruiting additional users.
- Increasing the number and complexity of procedures.
- Quantifying the additional revenue that these procedures will generate.
Most of this estimated additional revenue will be reflected on the net income line as few additional expenses will likely be acquired. This will not have an immediate impact on profits but it will reflect future profitability and will have an impact on the multiples offered, thus increasing the value of the center, often significantly. Clearly, another good way to increase earnings is to decrease expenses.
In addition to increasing revenue by increasing volume and selecting cases that pay high facility fees, you can increase profitability by:
Increasing efficiency, shortening turnover, case costing to make sure cases are profitable (if not eliminate them or do them out of network), reducing staffing costs, collecting receivables in 35 days or less, reducing supply costs, and benchmarking.
Now that you had an idea about how to value your surgery center? If you feel like learning more about surgery center emr, or anything else, call Ambula Healthcare Team: (818) 308-4108. Now discover if an EMR system is worth it for surgery centers!